Quiz definitions

Question 1

information is useful in predicting the future

Answer 1

predictive value

Question 2

• relevant to the decision at hand
• capable of making a difference in a user’s decision

Answer 2

relevance

Question 3

information is available prior to the decision

Answer 3

timeliness

Question 4

decreases in equity resulting from transfers to owners

Answer 4

distribution to owners

Question 5

information confirms expectations

Answer 5

confirmatory value

Question 6

• users understand the information in the context of the decision being made
• information can be understood when diligently reviewed by reasonably informed users

Answer 6

understandability

Question 7

increases in equity from peripheral or incident transactions of an entity

Answer 7

gain

Question 8

agreement between a measure and the phenomenon it claims to represent
- represents an economic phenomenon in words + numbers

Answer 8

faithful representation

Question 9

the change in equity from nonowner transactions

Answer 9

comprehensive income

Question 10

concerns the relative size of an item and its effect on decisions

Answer 10

materiality

Question 11

important for making interfirm comparisons

Answer 11

comparability

Question 12

the absense of bias

Answer 12

neutrality

Question 13

the process of admitting information into financial statements

Answer 13

recognition

Question 14

applying the same accounting practices over time

Answer 14

consistency

Question 15

requirese consideration of the costs and value of information

Answer 15

cost effectiveness

Question 16

• implies an agreement among different measures
• information is comparable if it helps evaluate information across firms or over time

Answer 16

verifiability

Question 17

principle that seperates a businesses transactions from its owners transactions

Answer 17

economic entity assumption

Question 18

states that a business financial activities can be divided into regular time periods

Answer 18

the periodicity assumption

Question 19

requires businesses to record expense in the same period as the revenue they generate

Answer 19

expense recognition

Question 20

requires a company to record assets at their original purchase price

Answer 20

the historical cost principle

Question 21

the process of accounting for revenue at the time a business earns it

Answer 21

revenue recognition

Question 22

the entity will continue to remian in business for hte foreseeable future

Answer 22

the going concern assumption

Question 23

requires companies to include all relevant information in their financial statements

Answer 23

the full disclosure principle

Question 24

the primary objective of financial reporting is to provide information

Answer 24

useful to capital providers

Question 25

statements of financial accounting concpets issued by the FASB

Answer 25

identify the conceptual framework within which accounting standards are developed

Question 26

in genera, revenue is recognized when

Answer 26

a good or service has been delivered to a customer

Question 27

in depreciation the cost of an asset, accountants are most concerned with

Answer 27

recognizing expense in the appropriate period

Question 28

the primary objective of expense recognition is to

Answer 28

record expenses in the period that related revenues are recognized

Question 29

the economic entity assumption states that, in the absence of contrary evidence, all entities will survive indefinitely true or false

Answer 29

false